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tv   Fast Money Halftime Report  CNBC  June 20, 2013 12:00pm-1:01pm EDT

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>> obviously we'll keep up coverage on a big day for the markets slout the session on cnbc. from the team that puts together "squawk on the street," thank you very much for watching. >> thank you for tuning in. if you want to know what's going on with housing, ivy zelman will be here to share her thoughts. that's coming up. all right, guys, thanks so much. welcome to "the halftime show." four hour to say until the close. there's a look at the major averages. the dow down 1.33%. the s&p down 1.5%. that's where the nasdaq slide sits, down 51 points. home wrecker. what will rising rates do to the one area of the economy that's buzzing? we'll ask the definitive voice on that suggest, ivy zelman, in a halftime exclusive. mining for answers. what does china's manufacturing meltdown mean for stocks?
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a trader debate is ahead. stocks falling hard and continuing that steep slide "today." the worst two-day drop for the dow this year. did ben bernanke kill the rally or is this the buying opportunity a lot of people have been waiting for? we're trading the fed fallout, what it all means to your money with joe terranova, josh brown, simon baker, and stephanie link. josh brown, answer that question. >> no, the rally has been killed. we haven't yet closed at a 5% connection yet but it looks like we're getting very close. what i would tell you is we've been beneath the 20-day moving average for almost a month now. so i think that rally that started from november has ended and now the only question is whether or not we're in a down trend or we're biding time until another leg up. i would tell you this is a massive carry trade unwinding. i would 234not want to be the ft one to dive in and say this is the worst it could get. it's the summer and clearly the markets are adjusting to some
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new news. i would let things play out but the bias has to be buy the high quality names that are getting slaughtered. >> stephanie, is the rally over or is this the great buying opportunity that everybody has been waiting for and a train load of people have come on this network and said buy the pullbacks? >> well, yeah, i think the volatility is here to stay. we are picking very carefully today quality names, financials, technology, some industrials. but the issue in my mind is bonds. let's look at the back up in rates. if it is a gradual back up in rates, that's indicative of the economy getting better and that's consistent with what bernanke said yesterday. if rates continue to go up much higher and much faster, that's obviously more problematic. so bonds need to stabilize for the market to stabilize, but i do think you go back to themes, and again it's financials, tech, it's housing, and we've been buying all of those today again very carefully. >> simon baker? >> i agree with josh. i think a lot of this is the
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carry trade being over. we're seeing that in the shakedown in the fx market and emerging markets. a lot of this has been on the multiple expansion. now that game is over. now the question is on earnings. i think that's what the stocks -- to stephanie's point, i think the same trade we've been talking about works. the cyclicals over the staples in this type of market. those are the types of names we're buying on the dips. >> you are actually buying some stocks today. >> yeah. >> we're taking some profits to raise money to buy other things that we now have a chance to. >> we actually took profits last couple of weeks so that we could buy, but i think the yield curve steepening is a positive for banks, and that's the group that we've been buying. we added aig yesterday, we're buying more of that yesterday. we like hartford. and some of the regionals are green on the day. >> joe, make sense of this for us. we have the vix at a new high, gold is the low nest 2 1/2 years. dollar is rallying hard. this plays right into what jeff gundlach was talking about on
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this show yesterday, that being there's nowhere to make money. there is nowhere to make money today -- >> on the short side. >> okay. bonds are selling off, vix is spiking, what do you do? you don't buy stocks today or -- >> you have people -- our folks right here say you do. >> okay. they all said they do and i'm telling you that you don't. i think you remain on the sidelines for the month of june and i think the reason is this and jeff is right. there is really not so much not to make money anywhere right now, but there's confusion. why is there confusion? over the last couple years we have had the ben bernanke put in the market. the put is not there anymore. no longer do you have the blind faith just to go out and buy risky assets, sell the treasuries back to the federal reserve, they will put them on the balance sheet. that's gone so you have confusion and it now boils down to doing true macro/micro analysis on stocks that will see what the labor report will be in july, what earnings are really going to be.
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the environment gets tougher for money managers. does it come back? yeah, i think it does. >> let's bring in steve liesman. he was at the fed news conference yesterday, has been following it all. steve, what do you make of what the traders have to say? are they getting it right? are the markets getting it right? >> can we do a wide shot on the traders? i need to do a survey. this is very important to me. here we go. nice. these guys are so quick in the back room there. quais, raise your hand if you got new information yesterday from bernanke from what you previously thought on the trajectory of fed policy over the next year. >> nobody raises their hand. >> it didn't come from bernanke. it came from the market itself. >> now, guys, could you put up the fed survey chart that i had. the cnbc fed survey. what did bernanke say yesterday? tapering towards the earned of the year, he said ending qe middle of next year, hiking the funds rate sometime thereafter. that's the fed survey and that's what bernanke said. i'm not sure what's going on.
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i think you want to be talking to those guys, scott, about what's going on in the market in terms of the trade of stocks and bonds right now and maybe the determinative factor is the rise in rates that changes the reality that we thought. i will tell you though that this move was pretty well telegraphed, pretty well processed, and the extent to which it's new, it's only because the fed chairman said what the market says it's now shocked that it heard. >> steve, the market clearly is acting as if it was shocked. you had notes -- >> like claude rains shocked. >> you have notes out fromself folks on the street, whether it was goldman sachs, using words like shock, surprise from the fed chairman and it's clearly showing up in the market because a lot of people are shocked by the violent move we're seeing in rates and the violent move down we're seeing in stocks. >> i was blown away as to the reporter covering the fed that bernanke actually said this and didn't say it in response to a question but made it more into policy, but then i took a step
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back and said, well, wait a second, what's new about this spoken policy rather than the one that was implied and understood by the market and i can't really find a lot of daylight there. i'm looking for daylight. i want to know where the investors, where my trader friends down there on the floor see and find something new and a reason to hit the red sell button rather than the blue hold button or the green buy button. >> let's ask them before we run. >> steve, let me ask you a question -- >> he just asked you a question. >> as a money manager, should i feel confident there's any clarity, that there's any sense of no further confusion when on one hand you have a dove who dissents and you have a hawk who dissents? so the interpretation for me is the fed really doesn't even know or trust their own expectations going forward. would you agree with that? >> here is what i think i know. i think i know what the chairman said yesterday was in response to your particularriticism
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that the fed had lacked clarity and our survey picked that up. you talked about it, joe. i think the fed has now laid out something that said the following, that if the forecast comes as we think it's going to happen, here is what will happen to qe. it was a very sort of strange statement in the sense that it wasn't a policy statement and bernanke said as he was deputized to tell the markets or to say this at the press conference, it was a weird construction, but in any event, i think there's a little more clarity that this is the trajectory if the economy goes the way the fed believes it will go. >> and it was very encouraging that he upgraded the economic growth and that he upgraded the job picture. this is something that we should be rooting for -- >> right, but stephanie -- >> positive for corporate profits. >> but he downgraded -- >> he acknowledged inflation. >> if deflation gets too bad, he will come back. he said he will be flexible and what i would say that if he's going to rae main flexible, that's the put under the market. he'll come back and he'll say,
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okay, we were ahead -- >> steve, it's josh, let me tell you the way traders are going to do this because this is what they always do. the narrative right now is, oh, no, the fed is not behind us. the fed is not going to buy bonds anymore. we'll have these jitters -- >> not true, by the way. >> let me finish my thought. the traders are going to go through these spasms which is what we're seeing right now. what ends up happening is the closer we get to any kind of actual tapering which by the way we still don't really know when it happens, the traders are then going to spin that narrative into a positive. hey, look, it's great, the fed doesn't have to buy as many bonds. it will take time for us to get that mindset into that position, but it's every single time. we always do this. >> so here -- a couple things that are interesting i think. one is that qe into 2014 to which i submit there was some doubt is now kind of policy, by the way. that's a new thing. that, you know, we picked that up in our survey i think three surveys ago this expectation for qe into 2014. that's now part of policy.
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the only thing i would say, the sort of on the other hand that an economist would come up with, a maybe what the market fears is a policy mistake. thinks is a salve for the tapering. that's the concern if there is a concern that it's a policy mistake. >> good stuff. we'll talk to you soon. >> my pleasure as always. >> the stunning spike hitting home builders hard today. what will the impact of rising rates really be on the housing market? earlier we heard from a citi housing analyst, but now let's talk to the definitive voice on the market, ivy zelman. she joins us on the phone in a cnbc exclusive interview. great to talk to you on a day like this. >> hey, guys. thanks for having me. >> yeah. so tell us, it's got to be the biggest question right now facing the market and the economy at large. is this going to kill the housing market? >> absolutely not. i think that we can't be complacent about rates rising, but the fundamentals remain rock
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solid, and i think that we appreciate the old playbook is still in gear now. sell on the news, ask questions later. and i think where we come back and look at why rates are moving higher, we all appreciate that part of the reason rates are moving higher is because we see employment growth, we see the economy getting better, and a result of the economy getting better is household growth. as you have household growth you need shelter to provide for those households and we have a shortage of shelter. when you look at the factors that drive the fumndamentalal outlook, we have a lot of ceiling before we get to what would even be a normal level of affordability. so we appreciate and aren't complacent about rates moving higher, but we also see this is the old playbook in action and there's a new playbook you need to put into action. >> there may be a different reaction from the fundamentals of housing and housing
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affordability and then clearly the reaction of what some of the home builders' stocks are doing today as we mentioned going into this interview and what clearly you have seen the reaction from the market itself on the fact that these stocks have pulled back so sharply. the violent and quick move that we saw in rates, did it surprise you based on what the fed had to say? >> absolutely. we all are surprised on the order of magnitude of the spike and obviously we don't want to see any rates moving in that speed. what i would say is when mortgage rates were headed lower and we were hitting new record lows in terms of mortgage rates throughout the housing depression, you couldn't convince someone to buy a house. you talk about affordability hit a new record level and yet people didn't want to buy deflating assets. today the main street consumer who is buying a house, they don't go into buying a house because rates are low or where rates are. they go in because they need a house. their family is getting bigger, their family is getting smaller,
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and then they look to see if they can reafford it and what the monthly payment will be. the main street reaction will be more resilient. the fundamentals will be stronger than expected. you will have much more earnings power with home prices continuing to rise with a shortage of supply with demand significantly exceeding supply, and i think the investors that buy on the dips will be very happy about it. >> when you were last with us, you said you were the most bullish you've been on housing in some 22 years. can you put into perspective how, you know, on the meter of that, where we are? are you still -- i know you sound so bullish, but are you still as bullish as you've been and if rates do continue to rise, if we get above 2.50% on the ten-year, does that start to drop off? >> as i said, scott, i appreciate we are very bullish and i have been saying we are the most bullish that we've been in my firm in 22 years because the fundamentals are rock solid. you know, if rates continue to
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move solid, we think mortgage rates will have an impact at some point. every 25 basis point increase, just a rule of thumb, it's equivalent of a price increase of 3%. realistically as mortgage rates continue to move up, they will start to have an impact on buying power. so we want to recognize that. at the same time if you just look at the monthly payment and what people can afford, i think home prices from here even if mortgage rates were at 6%, we could still see home prices rise another 20% before we would just get back to average affo affordability. we have to take into consideration a multiple of factors and not just look at affordability in isolation. don't forget, rents are still moving higher. the consumer who is seeing the job market getting better could have income growth. all of those have to be put into consideration. as of right now even if the ten-year continued to move higher, we think we have room before we will see the impact on affordability.
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we're appreciative that mortgage rates at some point will have an impact. back -- >> ivy, let me just ask you quickly -- >> -- when rates moved up, fundamentally they do have an impact because mortgage rates are 8%. but we're at a 4% mortgage handle. >> let me ask you quickly, so seasonally we should have a little bit of a slowdown around this time of year maybe as we get closer to the fall. is there a danger that wall street will misconstrue that as something more structural rather than something that just has to do with the time of year? and if so, is that where you would step in and start looking at the reits, the home builders, et cetera? >> well, we do look at the market sequentially and month to month. we do expect a slowing with respect to seasonality but we also because we appreciate what the normal month to month changes are sequentially, we would expect to be better than normal seasonal. so i think that we right now continue to see very strong
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traffic, actually traffic accelerated during the last several weeks, which is what we'd expect as people start to recognize they can't be as complacent about going out and buying a home today. if we did see a slowing relative to the normal sequential slowing and it was worse than normal, that would be concerning. we think we will cese see seque slowing but it will be better than normal. i think companies will come out strong and prove the earning power of this industry is far better than any other industry in the s&p. what other industry is going to be able to nearly triple off its bottom and have the pricing power that this market has today? i think what people don't appreciate is they don't really look at the fact that when you go back to '81 and '82 and mortgage rates were 16%, 18%, we did almost twice as much housing starts than we're doing right now. you have to put into consideration this population is
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growing. to me it's kind of silly and stupid to be as worried, but yet it's the old playbook. we have to be respectful and you can't just assume that equities are going to ignore it. we feared it was coming and, un230r7b8, itu unfortunately, it's what's going to be part of the head wind for this space but it's going to create big opportunities. >> that's why we wanted to hear from you on an important day like this. thank you for coming to the phone. ivy zelman. interesting analysis. buy the home builders here? >> i think we had tom barrack on the show the other day. his favorite stock was mt g, which was insurance. that's a great way to play it rather than own the home builders. >> i like the home builders. i can't help but think you're going to get a better shot at them. >> i think you have to own lpx. i wouldn't do the home builders just yet. coming up on "the half" stocks selling off for the
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second straight day. we have one stock in the green by double dim jits. one of morningstar's top bond fund managers gives his picks. revealing his game plan for making money and we'll be right back. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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welcome back. the bond sell-off is deepening. you look at what the ten-year yield is doing at its highest level in well over a year. to help us figure out the best
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way to profit from this spike of rates, let's bring in mark kiesel from pimco. he was also named morningstar's fixed income manager of the year. mark, nobody better to talk to about this today. what do you make of it? >> well, i think the markets don't like the fed pulling back support, and obviously we've seen a significant sell-off in interest rates. we think what was interesting yesterday is that the fed is actually quite optimistic on growth. the growth outlook that the fed is forecasting of 3% to 3.5% for next year and 2015 is very optimistic. pimco would be lower than that, and so we would see this back up in rates as actually a buying opportunity. >> really? what leads you to believe that rates are going to stop backing up? >> well, basically, you know, there are some bright spots in the u.s. economy, housing around energy, but overall the economy is very unlikely to grow at 5%
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or 5.5% knowledge nal which is what the fed is forecasting and, therefore, the degree to which the market is pricing in tapering is unlikely to materialize. these rates actually will probably stabilize and head lower towards the end of the year. granted, we're seeing a lot of unwinding and a lot of volatility, but these markets should stabilize over time and this will prove to be an attractive buying opportunity. >> hold on one second, simon. jeff gundlach was on our show yesterday who said treasuries were set to rally fairly quickly, that you're sort of in this scenario of really nowhere to make any money these days just given what's happening. >> yeah. if you look at our investment grade high quality corporate bond portfolios today as of this morning, they're yielding 4.25% to 6% for long maturity high quality corporate bonds. that's going to attract from our clients globally. you will see buyers gradually step in and obviously bernanke
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and what the fed's predicament is in has created a lot of volatility but the yield levels over time will prove to be attractive. >> the sort of meltdown going in the emerging marketeds, do you see any opportunity over there as you look out what's going on? >> we do see opportunity, and basically if you look at emerging market growth, it's slowing significantly. china is slowing, brazil's economy is slowing. these rate levels in brazil and mexico are attractive at these levels. so we are positive on interest rates in those countries. >> all right, mark. good to talk to you. thanks so much. >> thank you. >> interesting day happening in the treasury market, no doubt. coming up, it's a stock that won't stop. shares approaching five-year highs. is it too late to get long. we'll reveal the stock and its next move. coming up later, freeport-mcmoran, it's one of the worst performers in the s&p this year but one of our traders is digging beyond the numbers. a bull versus bear street fight coming up when we come back. [ male announcer ] this store knows how to handle a saturday crowd.
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welcome back to the halftime report. i'm josh lipton. we are watching the precious metals. silver down some 9% today. gold hitting its lowest level since september 2010. now down some 30% from its recent high in october. in terms of levels to watch, we spoked with mark newton, near term newton thinks we get to $1,240. says though he would be buying at that level in part because we're entering he says what is a seasonally bullish time for gold. scott, back to you. >> you have some of the firms on the street taking down their one-month and full-year forecasts now on gold. >> we've been consistent on this show talking about a bearish gold price. and it's going to continue. this is not a trade. this is an investment. the marginal buyer for gold used to be the emerging markets. they've got their own worries right now. they're not there to support it. gold is going down. >> you see the miners and some of the reaction out of china.
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it's a tough space to be in. >> there's a lot of low conviction money that's been herded into these gold vehicles whether it's gdx and gld or coins or whatever the case may be. that low conviction money is dribbling out. this could take a long time before everyone who wants out gets out. the hard core guys, they own physical. so you watch gld fluctuate on the futures and i don't think it's over yet. >> no one thinks buy? buying opportunity for gold here? >> no. >> if real estate is good, why own gold? >> lowest level in 2 1/2 years. >> strategically, 3% or 5%, it's fine but as a tractcle -- >> there are people who own it instead of cash. there are people who bought gold in lieu of cash. they have a 20% loss year-to-date. it's a very disturbing thing to see in your portfolio. >> and throes no inflation anywhere. bernanke just said it yesterday. it's decelerating. your case for owning gold doesn't make a lot of sense at this point. ja lots do our top three trades.
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first up, disney continuing to pull back. the stock getting downgraded at goldman to neutral from conviction buy. what do you make of this call? >> it's downgraded on a valuation. i think when they put it on the conviction list it was up 55% from there. one of the main concerns is that competition with espn, fox one sports coming out in the fall, will compress margins. it's more of a call on fair value. >> fed ex catching down grades from both jpmorgan and morgan stanley following the company's earnings yesterday. >> part of this is a function of the stock rally at 11% from the november low. i think they've kand of taken some money off the table. the quarter there were some pockets of weakness, international, pricing, express customers are trading down. the story long term i like, the management is good. it's not expensive at all. but i think you can get this at 90 or below. >> i agree with that. look at the cost cutting.
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fed ex will get it done. but it tells you a lot not so much about fed ex the stock but the global environment. it takes all your investments back to the u.s. if he had ex >> what about this gamestop news? >> this is one of the most incredible stories going on. it's truly unbelievable. stock is up 125% year-over-year. basically you had complacent shorts. they looked at this as an investment short. they stuck around too long, 30% of this float is betting against the company. microsoft came out yesterday and they said they were going to reverse that policy on not allowing used games, which is gamestops bread and butter to get store traffic. so i'm not surprised to see the rally here. i don't know how high it goes, but oppenheimer -- >> i got to give you kudos. i took the bear side on that bull and bear side and the stock has done nothing but go up. >> who knew microsoft would have such a quick reversal. i think dr. j a couple days ago was predicting they might and,
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in fact, they did. >> the gamers spoke very loudly, and at the end of the day you listen to your customers. >> i still think digital download longer term will be the death of this company but in the short term obviously the stock wants to go higher. >> the taper talk hitting bonds hard. as you know, the ten-year yield rising above 2.4% today for the if irs time in nearly 2 years. let's get more from jackie deangelis and the futures now crew. >> you can see it on the chart. as soon as bernanke said he was looking to reduce bond purchases, the ten-year yield got going and it didn't stop until it hit nearly 2.5%. anthony, how high can rates go? that's really the question. and at what level to people start to shift back into bonds? >> i'm looking at right here 2.4%, 2.5%. that's your next bit of resistance. we get through that, we could see 2.8%. what's really shocking to me today is you have an equities market that's so much lower and
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no money flowing into bonds. i'm looking at when the equity market does find a bottom and starts to rally, does that mean bonds go even lower from here? that's the big question. >> if we break through that 2.5% level, you think 2.8% could be next. jim, rising rates, they tend to be good for gold. why is gold down 6% today? >> well, rising rates tend to be good for gold when they're implying there's inflation. that's not what we're seeing. gold for some reason is on the naughty list. i will challenge gris on one thing. when s&p few you ares were down 30, bonds saw a bit of flight to quality. gold did not do that. the sentiment in gold has changed. the market is very clear where gold belongs and that means not in the portfolio right now. gold is toxic in my mind. >> gold going lower. catch more of jim and gris on our online show. we're going to have more on gold for you as the precious metal drops below $1,300. is peter schiff giving up or buying more? find out at 1:00 p.m.
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>> jackie, thanks so much. how about this? twitter has its newest tweeter. carl icahn is now on twitter. the billionaire investor tweeting just a few moments ago, twitter is great, i like it almost as much as i like dell. @carl c icahn is now on twitter. just a reminder you're going to hear from carl directly at our delivering alpha event next month, july 17th, keynote speaker. we're so excited to have carl in the fold on what's going to be a great event. a lot of big names are at that event of ours, our signature event. www.deliveringalpha.com for more information on that and how you can get tickets. so check that out. >> and doug caster is off twitter right now. >> he is. thank you. twitter is great. i like it almost as much as i like dell says carl in his first
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tweet. the biggest pops and drops now. drop for brazil etf, dropping 3%. josh? >> let's just call it what it is. it's a crash. this thing is down 20% in like four weeks. i don't know of another market that's dealt with this much pain year-to-date and i got to tell you, i don't think it's over just yet. the head winds here just seem insurmountab insurmountable. as much as i would love to buy it, i would hold off. >> steph, kroger? >> they reported a very good quarter today. they beat earnings, sales actually excluding fuel were better than expected, better gross margins. it's a high quality beat. stock will deliver 8% to 10% growth. it's a good story. >> newmont. >> no surprise this is off 4% also. p it pays a 4% dividend. the dividend could evaporate and the company is in trouble. >> cliffs natural. >> indicative of the entire
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space. iron ore is lousy. when i said don't buy stocks now, i will tell you you want to buy stocks in the second half of the year because there's nowhere else to go for all this money that's coming out of the market. it's not going into materials. it's going to go right here in the u.s. >> i thought you were getting choked up for a second. the dow heading for an eighth consecutive triple digit move. our next guest will show you how to navigate the conditions. plus, the largest copper mining company free moport-mcmo reaching a new low. one of our traders think it's bottomed, which is why we'll debate it. ♪
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welcome back to post 9. the mining stocks have been hit hard by falling commodity prices, weakness as well from demand in china. the world's largest commodities consumer. shares of freeport-mcmoran tumbling 20% in the last year.
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is it a smart bet on a global recovery or sounding the alarm of more head winds? let's debate it. stephanie is the bull, josh is the bear. 1:30 is on the clock. stephanie, make your case. >> so stock is down 17% this year. it's down 7% last year. so it's totally underperformed. on any valuation metric you look at this thing is trading at a discount to its five and ten year historical average. it's 40% discount to its peer group. it has world class copper assets. they're diversifying away from copper and i like those acquisitions. the company is getting no credit whatsoever for the synergies they're talking about. the balance sheet is strong. it's 4.5% dividend yield. that typically is a good time to buy commodity stocks or this one in particular. >> stephanie, i get it from a valuation standpoint, and i know you like to look for things that haven't worked yet. but i have to tell you, i think you're playing with fire here. fcx sits at the crossroads of
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the two worst things in the world rye now, one is emerging markets exposure and the second would be mining and metals and anything of the sort. nobody wants anything to do with either one and right now this stock is precariously perched two points above long-term historical support at 25. it's banging down on these levels that go back to 2009, and if it breaks below, i got to tell you, i think this thing is a teenager. >> i kind of view that everyone hates it as kind of an interesting contrarian play and i look at their balance sheet and i look at they're going to generate free cash flow at $7.7 billion between now and 2016. reduce debt -- >> when the markets turn this will be the right way to turn it. i think you have time. >> i don't think that the markets have turned. i'm not trying to suggest that and i am a longer term investor for sure but this is a blue chip company -- >> last word. >> it's a blue chip company, and you get a good dividend yield while you wait. >> simon baker, who made the more compelling argument? >> i have to go with josh. i agree with him. just from a commodity play.
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one interesting factor, the ceo bought $31 million worth of stock on tuesday which i like it when somebody does that but not in that particular company. >> what is it down, like 5% on thursday. >> josh, you blew yourself up at the end. it's not a falling knife. it's a terrible performing stock -- >> it's a -- >> and the bad news is -- >> time-out. it is not a falling knife. it has stabilized and in a market environment that's contracting significantly which shows you -- >> 6% is stabilized? >> it's not a falling knife. >> fundamentally we're talking about the fundamentals but if you look -- >> guys -- >> technic ideally it looks miserable. >> when it breaks that level, you will get a chance because i think, i think you could revisit those '09 lows. >> where is it trading? >> 24% in two years, guys. bad news is already priced in. a lot of the bad news is priced in. >> let's do this. who do you think won that debate? tweet us @cnbcfastmoney.
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ask your doctor about the only underarm low t treatment, axiron. good afternoon, everybody. coming up on a special power summit edition of "power lunch," we'll talk to five of the biggest strategists on wall street, the top equity folks from deutsche bank, jpmorgan, northern trust, wells fargo, credit suisse. they're all here in studio and we're going to ask what they expect for the second half of the year. do they think it's time to get in or out of the market? and if so, how? and exactly where? listen up, we want you to send us your questions, too. you can submit them on our facebook page, facebook.com/powerlunch.
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scott, back to you. >> look forward to that at the top of the hour. let's talk about the market real quick. dow is still down 200 points. staples leading the sell-off. financials, that's an area of the market that you really need to pay such close attention to now, isn't it, joe? >> that's first on your list right now. i want to be long financials in the second half of the year. i like the performance of regionals today. i tell you what, the preferred which have gotten really slammed hard, i'd look there first. i like the preferred in the financials. >> i don't think you have to wait until the second half of the year. i think earnings will be better than -- >> where do you want to skew? do you want to skew to mortgages or capital markets? is it goldman or is it more like -- >> capital markets. >> if you look at the regionals -- >> i want a morgan stanley. >> here is the problem -- >> if you look at the regionals they're outperforming, insurance is outperforming. >> here is one of the problems with the banks, jeffries this week, right, very weak fixed
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income currency commodities. is that a tell for some of the others, the morgan stanleys, the goldman sachs? it was a big, big drop. >> but not quite a bulge bracket. they don't have wealth management like morgan stanley. they don't have the same kind of banking like a bank of america or jpmorgan. it's kind of its own story. >> scott, do you remember a couple weeks ago at the conferences -- financial services conferences and jpmorgan said capital markets were better than expected. so i think you will have a nice offset. >> cme is one of the stocks that are up. >> i mean, you mentioned net interest margin. i know it's hard for the market to see this today. it's like the talk to the hand market, just doesn't want to hear it, but rising interest rates are not bad for the banks. >> they're not bad for the banks and they're also not bad for industrial stocks because it implies there's better growth ahead, so those are the two sectors you want to probably be overweight. >> also think about the
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discount. we never, ever talk about schwab. that's been a market leader. we never talk about e trade. these names are actually out performing your traditional capital market plays and i think they're an important tell on activity and confidence and they also benefit from higher rates. they're not making any money in a lot of the instruments they have out there right now. >> despite this two-day sell-off we're seeing in the markets, the worse for the dow this year, and the fed's taper talk, our next guest says to stick with stocks and trade on fundamentals, not the fed. mark freeman is chief investment officer at westwood holdings group and joins us from dallas. good to have you on, mark. >> great to be with you, scott. >> so what you're saying is i guess the markets -- we're going to catch our collective breath and then we'll step back and realize that stocks are still the place to be? >> yeah. i think in short i think you just phrased it perfectly. i mean, where we are right now, i would really view this as a transition process and,
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unfortunately, tran sising processes tend to be rather bumpy. like you were just discussing which i think is making some great points on the financials, i think when you look past the transition process, there really are some positives on the horizon. and i think ultimately that's what kind of got lost yesterday from chairman bernanke and the message. the problem is we still have to go through this liquidity adjustment, but once we do, i think, you know, again the fed, if they are removing ak diggs, they're going to for the right reasons and that should flow through to the fundamentals. >> it's like the market is like a 4-year-old. you're going to take the training wheels off and it may take a second or two for us to realize he can actually ride the bike. >> look, exactly right. i think that's a great analogy for that. some people aren't going to be happy with it, but i think as investors we have to adjust, okay? and just like when a parent is talking to a child, you know,
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eventually you have to understand, okay, here is what we're doing. you can either go along and make the adjustments or not, not, bu think the more prudent thing and ultimately from a return standpoint is you're going to want to make the adjustment. >> one of the stock picks you like is general electric. do you have any sense as to when they're going to increase their dividend again? i think that's kind of the chatter. and also do you think they'll spin off ge capital and that will be a positive for capital shares. >> stephanie, those are relative points significant to that name. as far as the dividend, i think it's going to be sooner rather than later on that point. i would say by the second half of the year. e-mails have come out and said, look, we're going to return roughly $18 billion of capital to shareholders in various ways this year. i have to think an increase in the dividend side is a part of that. as far as a spinoff of the ge capital, that's a little bit harder question to answer, obviously, from there.
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but what we are seeing is they are obviously going to shrink that business, they continue to do so, and that's a great source of capital returning it back to ge corp. >> i apologize, mark freeman. we're having an audio problem. mark, thank you very much, westwood holdings group, cio mark freeman. face lobook losing ground. you tweet it, we trade it. our pros are taking four of your stocks and turning your requests hopefully into money. don't go away, we'll be back in a moment. it, tdd# 1-800-345-2550 hours can go by before i realize tdd# 1-800-345-2550 that i haven't even looked away from my screen. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 that kind of focus... tdd# 1-800-345-2550 that's what i have when i trade. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 and the streetsmart edge trading platform tdd# 1-800-345-2550 from charles schwab helps me keep an eye tdd# 1-800-345-2550 on what's really important to me. tdd# 1-800-345-2550 it's packed with tools that help me work my strategies, tdd# 1-800-345-2550 spot patterns and find opportunities more easily.
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we're less than ten minutes away from facebook's big product announcement, shares of the social network down about 1% today c today. let's take our positions. rumor to be, video for instagram. a needle mover for a needle that hasn't moved. this stock doesn't pop on these meetings. they keep trying to engender these hyped-up levels of excitement, but it's a diminishing return thing on the trades. i think stock has bottomed on the 20s, but i want a reason to be wrong, and i doubt this announcement is going to do it. >> you don't buy it for a new product necessarily, but you look at all the new products they've put in place, you look at the progress they're making
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in 1.9 billion. that's what they were tracking for the end of the year from nothing last year. that's going to grow over time. at 25 times x cash, the stock is not extensive for a grower. >> i think what they're going to announce today is a move -- >> you own the stock. >> i do own the stock. >> you're like one of the biggest believers in facebook on the show. >> i like facebook. i think they've shown evidence they can monetize into advertising. one concern is, in the terms of demographics, that people under 25 will switch over and move on. >> it takes a long time to play out, and it may be an overblown fear. >> when you the viewers ask, we deliver on trades of four stocks tha lit up my twitter feed. first up, hartford. steph? >> i like it.
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they're trading at a discount to its ten-year average. we own it and like it. >> sony. josh, quick. >> sony is trading based on headlines from dan loeb, so if you're an adventure trader, this is for you, otherwise i would avoid it. >> slum -- slum bcl, umberger before their gift helped preserve the point... before a credit solution was used to expand their business... before trusts were created for their grandkids' educations...
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that's very interesting. congratulations. >> well, we've tallied the results and you said stephanie link, the bull on the free court, won the debate. >> don't buy the stock in real life. >> we wrap it up again on a rough day on the street. joe? >> steph? >> mft bank. >> simon baker. >> cme group. >> that does it for us.
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don't forget to catch more "fast money" 5:00 p.m. tonight. follow me on twitter, scott walker. a big market day. it is the power summit. i can't wait for it, and it starts right now. time is money, and time never stops. money never sleeps. almost six months into 2013, the s&p is up. what should we expect for the next six months? today a special power summit with five of wall street's top strategists and chief investment officers. >> hi, everybody, and welcome. i'm sue herera along with my partner. >> sue, good to see you. this is, i think, the perfect day to help
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